Foreign Military Sales Resolution at Caterpillar's 2008 Shareholder Meeting

WHEREAS the United States exports weapons and related military equipment and services through foreign military sales (government-to-government), direct commercial weapons sales (U.S. companies to foreign buyers), equipment leases, transfers of excess defense materiel and emergency drawdowns of weaponry.  In 2006, the U.S. ranked first in arms transfer agreements with developing nations, including those in the Near East and Asia, with nearly $10.3 billion or 35.8% of these agreements.  The U.S. also ranked first in the value of arms deliveries to developing nations at nearly $8 billion or 40.2% of all such deliveries. The weapons sold range from ammunition to tanks, supersonic combat aircraft, missiles and submarines.  ("Conventional Arms Transfers to Developing Nations, 1999-2006," Congressional Research Service, Report for Congress, September 26, 2007). Although it does not produce weapons systems, Caterpillar has, in the past, sold dual use equipment such as bulldozers through foreign military sales; however, the frequency and volume of sales is unknown.  Nor is there precise information on which countries have received Caterpillar equipment.  RESOLVED:  Shareholders request that, within six months of the annual meeting, the Board of Directors provide a comprehensive report, at reasonable cost and omitting proprietary and classified information, on Caterpillar's foreign sales of weapons-related products, and other equipment and services related to those products for the past 10 years, including the country of destination for the products. SUPPORTING STATEMENT We believe with the American Red Cross that "the greater the availability of arms, the greater the violations of human rights and international humanitarian law."  Global security is security of all people. We are seeing, too, an increase in human rights abuses inflicted on women, people of minority ethnicities, personnel of NGOs offering medical and other human services as well as employees of corporations servicing DOD contracts.  Use of Caterpillar equipment by foreign militaries in actions that violate human rights and international humanitarian law raises issues for Caterpillar corporate policy and risks damage to the company's reputation.  Therefore, we believe it is reasonable that the report include:

1. Processes used to determine and promote foreign sales;
2. Criteria for choosing countries with which to do business;
3. A description of procedures used to negotiate foreign arms sales, government-to-government and direct commercial sales and the percentage of sales for each category;
4. For the past ten years, categories of military equipment or components, including dual use items exported for the past five years, with as much statistical information as permissible; contracts for servicing/maintaining equipment; offset agreements; and licensing and/or co-production with foreign governments.

11/26/2007

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